China Netcom, the country's second largest fixed-line operator, is ready to embrace new changes, just as soon as Chinese telecom regulators finalize plans for industry-wide reform.

In an exclusive interview, Vice-Chairman of China Netcom Edward Tian told China Daily he believes Netcom and other telecom operators will benefit from the changes.

He said: "I believe the upcoming adjustment will definitely improve the current telecom situation and help optimize the industrial structure. It will do good to all domestic telecom operators in the long run.

"We are waiting for the regulators decision on the reshuffle as there are still no official policies related to the telecom adjustment and 3G issues."

It was reported early last month that China Netcom is to merge with China Unicom's GSM (global system for mobile communications) cellular network, with China Telecom purchasing China Unicom's CDMA (code division multiple access) network.

Analysts said they believe that if China Netcom acquires an existing mobile telecom network, it will allow the carrier to break into the mobile business and lay a solid foundation for future 3G development.

The split of China Unicom is likely to lead to the issuing of three 3G licences when China kicks off its 3G implementation.

Along with other telecom operators and equipment providers, China Netcom has long been involved in the 3G-related test organized by the Ministry of Information Industry.

And rumors are rampant that the Chinese Government is likely to roll out the telecom reshuffle and 3G licence later this year.

"We don't have a timetable to launch 3G services as there is still no official word on when the telecom reshuffle and 3G implementation will take place," said Tian.

"But we are quite confident that we will be able to secure a 3G licence because China Netcom has made brilliant achievements.

"We are very confident on the 3G as our Hong Kong-listed company has abundant cash flow, many options for fund raising and strong support from our parent company," Tian added.

According to the vice-chairman, China Netcom will work cautiously on 3G network planning and business strategies.

"Investment return will be our focus after the granting of a 3G licence. We won't make blunt investment," he stressed.

China Netcom will continue to focus its business strategies in areas such as broadband and Internet business and international business.

To further its broadband business, China Netcom formed a strategic partnership with PCCW by buying a 20 per cent stake in PCCW for US$1 billion in January.

"It is a win-win deal for us as we are quite complementary in areas of technology, market and services," Tian said.

China Netcom is seeking co-operation with PCCW in the areas of broadband video conferencing, international business, mobile business, Yellow book services and real estate, he added.

The two firms also said they would set up a joint venture on the Chinese mainland.

"We will not step into content-related services as we seek enhanced co-operation with content providers, equipment providers and other partners to roll out more new and value-added telecom services to meet customer demand," Tian said.

"Meanwhile, we welcome foreign telecom operators to come to the Chinese market for possible co-operations."

Analysts believe that seeking co-operation with domestic telecom operators may be the only feasible option for foreign telecom operators seeking to enter into the Chinese market. Most of the world's telecom operators, they believe, are unlikely to invest heavily in China because of investment controls and higher expectations from their shareholders.

(China Daily May 18, 2005)